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Kenya government Sued in New York Court over Sh600 Million

kenya govermentIn an unprecedented civil case, the government has received summons from an American court over claims that it failed to pay a local contractor over Sh600, 000,000 in multiple claims.

The United States District Court, Southern District of New York has served Kenya government lawyers with summons to appear to defend itself against claims that it failed to enforce the decision of a court-appointed arbitrator to pay Spencon Kenya limited the money after the completion of a contract it had completed.

The summonses were issued in Case no 13 Civil 7724 of the American court files.

The claims against the Kenya government arose out of a contract awarded to the Spencon in July 1997 for the construction of civil and electrical works at the Mombasa municipal council.

Upon completion of the project, the company made several claims agonist the Council and the former Ministry of local government. The claims comprised reimbursement of additional outstanding costs, claim for extension of time interest on delayed payment and VAT. The government however rejected the claims on grounds that it had already overpaid the contractor by over Sh. 15,000,000 through inflated costs.

The dispute led to the appointment of an arbitrator T. Thuo who the government now accuses of having arbitrarily awarded the company interest in the sum of 459, 036, and 702. He awarded them a further 106, 776, 701 in a different contact.

In a counter suit at the High Court, the government says that the claims by the company are malicious and unmerited.

“The arbitrator exceeded the scope of the arbitration by granting a relief that was neither pleaded nor prove,” states the government suit field through Iseme, Kamau and Maema advocates.

The Attorney General and the ministry of devolution and planning have accused the arbitrator of exceeding his powers by drawing up ‘directions’ that have no basis in law.

“It was not available for the arbitrator to descend into the arena of the litigation and ad arrange for the drafting, typing and execution of a document on behalf of one of the parties. The document ensuing from such misconduct by the arbitrator is incapable of enforcement,” the government argues.

The government claims that the decision to commence enforcement proceedings s in American courts is a violation of the Kenyan constitution and infringes on their rights to access Kenyan courts.

“The filing of proceedings out of Kenya has denied the petitioners the opportunity to challenge the enforceability of the awards and directions,” reads the petition.

It further contends that the decision by the company is meant to apply political pressure on the Kenyan government to settle the awards.

“There is no valid basis upon which the respondent has instituted the proceedings in New York. It is malicious, in bad faith and is an outright attempt to thwart justice and should not be countenanced,” the government petition says.

The Standard

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